Now this could be acceptable if he was also saying, "lets get this overwith, default, deal with the fall out and start again." Of course, this is not what he is saying, instead he is appealing to the German public railing against reality. This the the same position as Merkel and Sarkozy proposing a Tobin tax they know will be vetoed by the British.

It is a poor state of affairs. Worse still, I am now forced to agree with Gordon Brown on something. He has said it is of the highest urgency that the G20 is convened to ehlp the world work a way out of the current mess - and on this he is absolutley right (what he thinks the solution is, I am less sure I will agree with...).

13 comments:

Sebastian Weetabix
said...

It's funny. I just sat through a management meeting when we reviewed our results YTD. We have ok growth (+10%), profitability is up a bit, we have reduced our costs and CNWC and we have a nice little cash cushion in case of difficulty... and we have deleveraged significantly since 2008. So I look at the market turmoil and wonder just how bad things can really be. Back in 2008 at the same time sales were down more than 50% (IIRC). I can't help thinking if there is a disconnect between the stock markets and the so-called real economy right now.

SW - I think the same in many ways (e.g. i am long the stock market) as my own business is similar to yours, our Q1 was ok, not stellar, the pipeline looks ok - no one is panciking expcept when they read the papers....

however, the issue are these big macro ones and so like 2008 the situation may be slung upon us - when countries default, banks fail it will have big repercussions in the real world so to speak?

I think we are in Charles de Gaulle noble lie territory when he declared that France was a nation that rose up against Hitler.

As too 2008, "it was the banksters that dun it", but it was and is only half the story, The pols cant bring themselves to say that we F***** up big time too, instead they said in effect "we are pure and they are not, so follow us"

Trouble is they believe the lie.

I would say we are at defcon 3 (round house) in the process up an upgrade to defcon 2 (fast pace)

Firstly attempt to use the crisis to further political integration by having a central monetary authority. This can and I believe will miscarry. It would mean the Germans amongst other would accept paying for the PIIGS as a permanent commitment.

Secondly, an abandonment or retrenchment of the Euro, which will mean a major reversal and possibly collapse of the EU project. This is completely unacceptable to most of the politicians.

The EU has bent its own treaties to keep the Euro going. Our own politicians are not acting in the UK's national interest by throwing money into the bailouts. Obviously there will be tensions and obviously this will be pointed out. Also expect people like Merkel to operate in headless chicken mode. They don't really have any answers apart from keeping calm and carrying on.

I share the lack of faith in the likelihood that Cameron will refuse to institutionalise the UK's propping up a currency union we are not part of.

"I share the lack of faith in the likelihood that Cameron will refuse to institutionalise the UK's propping up a currency union we are not part of."

Exactly. This is effectively what every British government has done since Heath's. There will be either or both a stick and a carrot (another non-existent CAP reform, anybody?) and Cameron will crumble.

"It would mean the Germans amongst other would accept paying for the PIIGS as a permanent commitment."